Venture Financing Report – Q1 2018 – Valuations Continue to Rise in the New Year

In the first quarter of 2018, both deal volumes and aggregate dollars raised remained robust, though slowing from the torrid final quarters of 2017. In Q1 2018, Cooley handled 205 disclosable deals representing more than $4.9 billion of invested capital.

During Q1, median pre-money valuations continued to rise to record levels. We witnessed an increase in median pre-money valuations across all deal stages, with the exception of Series C transactions. Valuations for Series A deals hit levels not seen in 14 years of reporting. Up rounds remained at high levels, as 83% of transactions were up rounds during the quarter. We also saw a decrease in transactions structured in tranches across all industries.

Visit Cooley GO to view the interactive visualization.

Commentary from Matthew Howard of Norwest Venture Partners

On his market outlook: Overall, I am extremely bullish as technology continues to be a major contributor to the US economy, and I do think disruptive technology and business models will continue to change many aspects of healthcare, consumer and enterprise opportunities.

On valuations: With so much capital deployed over the past several years, valuations seem to have cooled for some companies needing more time to get aligned with the “rule of 40” metrics.

On exit routes: I expect, based on 2016 and 2017 data, that more often than not, companies will go the M&A route.

On M&A: Q1 2018 saw a huge increase in the tech M&A market from non-tech buyers. Transactions led by non-tech buyers nearly tripled from Q4 2017.

Read Cooley’s full interview with Matthew Howard on Cooley GO.

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